Fort Bonifacio Dev’t Corp. v Yllas Lending Corp. RTC.

The RTC dismissed Tirreno’s complaint for

G.R. No. 158997, October 6, 2008
forum-shopping.
CARPIO, J.:

On 4 March 2002, Yllas Lending Corporation and Jose

On 24 April 1998, Fort Bonifacio Development
S. Lauraya, in his official capacity as President,
Corporation (FBDC) executed a lease contract in favor
(respondents) caused the sheriff of Branch 59 of the
of Tirreno, Inc. over a unit at
trial court to serve an alias writ of seizure against
the Entertainment Center Phase 1 of
FBDC. On the same day, FBDC served on the sheriff an
the Bonifacio Global City in Taguig. The parties had
affidavit of title and third party claim. FBDC found out
the lease contract notarized on the day of its
that on 27 September 2001, respondents filed a
execution. Tirreno used the leased premises
complaint for Foreclosure of Chattel Mortgage
for Savoia Ristorante and La Strega Bar. Two
with Replevin, docketed as Civil Case No. 01-1452,
provisions in the lease contract are pertinent to the
against Tirreno, Eloisa Poblete Todaro (Eloisa), and
present case: Section 20, which is about the
Antonio D. Todaro (Antonio), in their personal and
consequences in case of default of the lessee, and
individual capacities, and in Eloisas official capacity as
Section 22, which is about the lien on the properties
President. In their complaint, respondents alleged that
of the lease.
they lent a total of P1.5 million to Tirreno, Eloisa, and

Antonio. On 9 November 2000, Tirreno, Eloisa and

Tirreno began to default in its lease payments. By
Antonio executed a Deed of Chattel Mortgage in
2000, Tirreno was already in arrears by P5,027,337.91.
favor of respondents as security for the loan.
FBDC and Tirreno entered into a settlement

agreement. Despite the execution of the settlement

The sheriff delivered the seized properties to
agreement, FBDC found need to send Tirreno a
respondents. FBDC questioned the propriety of the
written notice of termination due to Tirreno’s alleged
seizure and delivery of the properties to respondents
failure to settle its outstanding
without an indemnity bond before the trial
obligations. Subsequently, FBDC entered and
court. FBDC argued that when respondents
occupied the leased premises. FBDC also appropriated
and Tirreno entered into the chattel mortgage
the equipment and properties left by Tirreno pursuant
agreement on 9 November 2000, Tirreno no longer
to Section 22 of their Contract of Lease as partial
owned the mortgaged properties as FBDC already
payment for Tirrenos outstanding
enforced its lien on 29 September 2000. However, the
obligations. Tirreno filed an action for forcible entry
RTC did not favor FBDC argument, stating that Section
against FBDC before the MTC. Tirreno also filed a
22 of the contract is void, it cannot vest title of
complaint for specific performance with a prayer for
ownership over the seized properties. Therefore, FBDC
the issuance of a temporary restraining order and/or a
cannot assert that its right is superior to respondents,
writ of preliminary injunction against FBDC before the
who are the mortgagees of the disputed properties.
When the case reaches the Court FBDC alleges among damages for the taking or keeping of the properties

others that the trial court erred in depriving FBDC of seized from FBDC.

its properties without due process of law when the

trial court erroneously dismissed FBDCs third party

claim, denied FBDCs intervention, and did not require

the posting of an indemnity bond

for FBDCs protection.[12]

Issue: W/N the trial court erred by not requiring the

posting of an indemnity bond

Held: Yes, the Court stated that pursuant to Section 14

of Rule 57, the sheriff is not obligated to turn over to

respondents the properties subject of this case in view

of respondents failure to file a bond. The bond in

Section 14 of Rule 57 (proceedings where property is

claimed by third person) is different from the bond in

Section 3 of the same rule (affidavit and bond). Under

Section 14 of Rule 57, the purpose of the bond is to

indemnify the sheriff against any claim by

the intervenor to the property seized or for damages

arising from such seizure, which the sheriff was

making and for which the sheriff was directly

responsible to the third party. Section 3, Rule 57, on

the other hand, refers to the attachment bond to

assure the return of defendants personal property or

the payment of damages to the defendant if the

plaintiffs action to recover possession of the same

property fails, in order to protect the plaintiffs right of

possession of said property, or prevent the defendant

from destroying the same during the pendency of the

suit.

Because of the absence of the indemnity bond in the

present case, FBDC may also hold the sheriff for